Vince Cable

Spirit of the age

VINCE CABLE is a phenomenon of our troubled times. By some measure, Mr Cable, the economics spokesman of the Liberal Democrats, the smallest of Britain's big three political parties, is the most popular politician in Britain. In any putative government of national unity, he would be the default choice to be chancellor of the exchequer. What is all the more remarkable about Mr Cable's improbable standing is that he is admired in almost equal measure by other politicians and a cynical public.

His celebrity owes nothing to charisma or youthful good looks. Indeed, on two fairly recent occasions, when the leadership of his party fell vacant, he was judged to be so lacking in both that it would be futile for him even to stand as a candidate. Two things explain Mr Cable's present status as “the sage of Twickenham” (his parliamentary constituency). The first is that he was the only major politician consistently to warn about the threat of Britain's debt mountain, both private and public, to the long-term stability of the economy. Indeed, he has been banging on persistently about excessive credit expansion and the dangers of asset-price inflation for at least six years—a lone voice in a sea of complacency.

The second is that Mr Cable's rather austere appearance (he could easily be a stern headmaster or a bank manager) belies both a biting wit and a passionate nature. While serving as acting leader of his party 16 months ago, he drily observed of the hapless Gordon Brown: “The House has noticed the prime minister's remarkable transformation in the last few weeks from Stalin to Mr Bean.” During a recent appearance on Desert Island Discs, a radio programme, he spoke movingly about his two marriages (his first wife, Olympia, died in 2001) and his love of ballroom dancing.

Consequently, the little book that Mr Cable, a former chief economist with Shell, has written to explain the economic crisis and to offer his prescriptions for dealing with it will reach a wider and more receptive audience than most such tracts. It deserves to do so. As an account of what happened and why, it is both admirably clear of befuddling jargon and authoritative in its range and detail.

Where Mr Cable could be accused of falling short is that nearly all his policy recommendations are of the kind that few sensible people could object to. He calls on politicians to resist the clamour in many countries, particularly America, for beggar-my-neighbour protectionism. He supports an internationally co-ordinated fiscal stimulus and the use of bad banks to mop up toxic assets. Looking to the future, he believes that monetary authorities must do more to lean against excessive exuberance when the next boom is under way by targeting asset-price inflation and drawing up new rules for assessing the capital adequacy of banks. Mr Cable also wants bankers' bonuses to be paid largely in stock, redeemable only after several years, and mortgages to be conditional on the down payment of substantial deposits.

The one controversial note (apart from a slightly half-hearted plea for Britain to join the euro zone) is a call to governments to address the growth of inequality that has characterised the past quarter-century, especially in Anglo-Saxon societies. Mr Cable thinks this was tolerated only because it was erroneously believed to be the price of economic dynamism.

Intellectually, Mr Cable is never less than a doughty defender of free markets, but like many on the centre-left he hankers for Britain to acquire a few more of the characteristics of Scandinavian-style social democracy. Given where the casino capitalism of the past few years has left us, many will agree with him. That may not help the busted flush that is New Labour, but it is a warning to the Tories that the spirit of the age is not entirely with them.